Capitalism in Crisis: Who Are the Real “Takers”?

Capitalism is in crisis across the globe. When both the President of the United States and the Pope take out after its worst manifestations within days of each other, you know there’s an internal time-bomb inside this dysfunctional economic system.

Though the American population clearly feels and is forced to deal with the ramifications of this failing system, it’s highly unlikely that capitalism will be dismantled in favor of full-scale socialism. (Even though recent U.S. polls demonstrate that “socialism” no longer is a boogeyman to be frightened of.) So the question now is which type of economic system do we want to live under: hard line, I’ve-got-mine-Jack-you’re-on-your-own capitalism? “capitalism with a human face”? democratic socialism? a new blend?

While we’re considering those choices, let’s look at a little history.

Back in the 1930s, following the economic crash and Great Depression, both socialism and communism were gaining force in the United States and around the globe.

To cut the legs out from under those leftist movements, the aristocratic President Roosevelt borrowed a bit of socialism for the creation of the Social Security system and other people-friendly programs, such as the Civilian Conservation Corps (CCC) and Works Progress Administration (WPA) to put out-of-work laborers temporarily on the federal payroll to help construct roads, bridges, parks and public buildings.

Our Own Generation’s Depression

In our own time, we’re still suffering the after-effects of a semi-permanent economic depression fueled by greed and the lack of tough, appropriate regulation of the finance and banking sectors. The economy remains in dire straits; the gap between the truly wealthy and the rest of us shows little signs of closing. The long-touted “American Dream” no longer offers a means by which many of the poor and middle class can make their way up the socioeconomic ladder.

Outside of the top 1% extremely wealthy, few have much disposable income, there are few good-paying jobs for the working class, partly because of outsourcing abroad, increasing robotization, unimaginative, old-style business thinking, etc. Moreover, violence and threats of violence have increased in our class-based inequality system.

It’s the most simple Keynesian prescription: If most people have little money to spend, the economy will remain locked in its present state of torpor. If they have some extra cash, they will spend it, thus greasing the wheels of economic activity.

In an ideal world in this scenario, the economy would bounce back into a robust recovery, jobs would be plentiful, and all those paychecks would bolster a lively and politically stable economic scene. But there is little hope that scenario can take place. All over the world, the battle is raging between the “austerians” — those “austerity” advocates who want to tighten down the screws on the economy, which negatively impacts mostly the poor and middle-class — and those who prefer the more Keynesian, grow-out-of- the-recession approach through infrastructure investment, an increase in targeted fees and taxes, aiding progressive entrepreneurial ventures with tax incentives, etc.

In much of the developed industrial world, mainly in the U.S. and Europe, austerity reigns, and the ones benefitting are those at the top of the economic ladder. Much of the conservative rightwing excoriates the poorer classes as “moochers” and “takers,” but it’s quite clear that the true “takers” are the “one-percenters” who get more and more wealthy on the backs of those beneath them.

Getting Money Into Circulation

Rightwing “trickle-down” theories are little more than heartless Republican spin on what is, at heart, a socio-political fraud. Far better that the government arrange to get disposable funds into the hands of those who have little such largesse.

In other words, straightforward Keynesian macro-economics, proven time and again by history, as opposed to austerity (cut government and taxes and screw the poor), which history has clearly refuted. In fact, forget history: look at the economies abroad today, where the Keynesian solution is promoting recovery (in Iceland, parts of continental Europe, the Pacific Rim), and austerity, once again, is failing (in the UK, Greece, Spain).

I am not a trained economist; my degrees are in American politics and international relations. But even ordinary observers can figure out that remaining in our current status quo is a risky, and losing, proposition.

Getting Cash to the Public

Getting cash into the hands of those who would spend it is neither a new nor revolutionary idea.

After the 2007-2008 crash, the Bush administration’s stimulus program — a worthy endeavor but way too weak to do much good — included rebates on tax revenues going out to 52 million ordinary citizens. The average stimulus check was $250, and almost universally was spent quickly on life-essentials, thus priming the economic pump.

In addition to the stimulus motive, one must also fold in the moral imperative in our national DNA since America’s founding: The Preamble to the Constitution stipulates that an essential function of our government is to “promote the general welfare.” And so, we look after one another and ensure that an economic safety-net exists for those who, through no fault of their own, are suffering in the wake of a failed “trickle-down” approach.

There are a number of major initiatives and programs that result in getting governmental funds into the wallets of millions of ordinary citizens:

• Earned-income tax credit. This 1975 law provides for a refundable federal income tax credit for low to moderate- income individuals and families. When EITC exceeds the amount of taxes owed, it results in a tax refund to those the employed who claim and qualify for the credit. Such a program doesn’t help any during the year for cash-flow purposes, but it does allow poor folks to keep their earned income sans taxes. In short, knowing that they will receive a tax credit or check at the end of the tax year certainly helps out a lot.
• Social Security checks are spread out over years to our elderly citizens, to make sure there is some monetary floor under their feet in their less-productive period of life. Those Social Security recipients worked hard to earn those monthly checks — in short, they paid into that program for decades and are entitled to those funds — and, together with other initiatives, they constitute an important underpinning for society’s elderly.
• Government “make-work” programs, such as FDR’s WPA, CCC or our generation’s hiring of at-risk teenagers in the summers. Today’s infrastructure needs are massive and immediate; a new, temporary WPA- or CCC-type program — where hard- working infrastructure laborers would get much-needed checks — would do wonders for the economy and to the sense of self- worth of millions of workers currently in involuntary “retirement.”
• Unemployment checks are designed to go out to millions of those who have lost their jobs through no fault of their own. In an economy where there are not enough jobs to go around, those unemployment checks help families survive and guarantee that governmental cash goes straight back into the economy. Currently, the Republicans are making sure that more than 1.3 million of the jobless will receive no more such unemployment checks, even knowing that such funds get plowed back immediately into the troubled economy.
• The federal government offers special subsidies and survival aid to children in need, and to families hard put to buy groceries, through its Supplemental Nutrition Assistance Program (SNAP), formerly known colloquially as “food stamps.” One would think that providing this assistance would be non-controversial, but the Republicans, taking it out on the poor again, have continually cut the program and are refusing to restore this much-needed aid to the destitute.

A Guaranteed Income Floor?

Given the principle that there should always be a “safety net” to catch those who have fallen badly during hard times, and that the economy needs those cash infusions to keep the wheels turning, serious economists are asking why the Treasury is not printing more money and getting it directly to the people who so desperately need it. (There are even wilder ideas circulating in financial circles these days: building a minimum income floor for every citizen, and minting platinum coins to raise emergency funds. Economists and politicians are so desperate for solutions to capitalism’s crises that ideas once thought to be too extreme to be taken seriously now are prompting examination by noted thinkers.)

If stimulus-infusions are part of the solution, how big should those checks be, and for how long should this temporary emergency fund be tapped? $250 a month for years, say? $500 for six months? $1000 for three months? $20,000 per annum if a minimum- income floor?

Certainly, one wants to stimulate the economy far beyond subsistence grocery shopping. For the economy to take off, it would seem to make sense to grease the wheels in large enough amounts, for a long enough time, to provide both for groceries and medications and adequate, affordable housing. And a way for larger purchases (cars, houses, refrigerators, etc.) to be made, thus enlivening the manufacturing sector.

Where Would the Money Come From?

OK, let’s suppose that the situation gets desperate enough to make options mentioned in this essay look reasonable. Where would the money come from to underwrite such massive programs?

It seems obvious that the tax structure would have to be rejiggered by Congress, no doubt over the strenuous objections of the 1%, to make up for the high costs. That could result in, say, a top, marginal 50% income tax rate, or even 90% top rate for the tax on income over, say, one million dollars, as it was under the Republican presidency of Dwight David Eisenhower in the 1950s.

Or it could be termed a one-time only or annual “surtax” for the extremely wealthy of, say, 2% or 5% or 10% or 20%, whatever, added on to their IRS bill.

A Populist Uprising Required

Of course none of this could happen unless a tsunami of popular/populist anger and determination sweeps over the country and make it happen. The current dysfunction of our politics and capitalist system is building up a head of steam, and conceivably could blow at any moment.

There are a few progressive elected officials on the national scene, such as Elizabeth Warren, Bernie Sanders, Allan Grayson, Keith Ellison, et al. — backed up by such progressive thinkers as Paul Krugman, Robert Reich, Rachel Maddow, Bill Moyers, Chris Hayes, et al. (And did you notice the other day that Republican heavyweight Colin Powell came out in favor of single-payer health care?) We can count on their activism and bully-pulpit leadership. But we can’t rely on political revolution coming from the top down or happening overnight. It’ll take a concerted effort from the grassroots to build the from-below radical momentum necessary to move the system in the required new direction.

(While we’re engaged in our radical building project, we can’t forget electoral politics. Advice: Forget the 2016 presidential race right now; we need to concentrate on the 2014 midterm election. Money and energy to the more progressive candidates.)

Those of us engaged in that long-term struggle will continue to be buffeted and attacked by an in-place elitist political infrastructure that maintains effective control of mainstream media, a good many think tanks, a good share of the courts and judicial system, along with far too many local, state and federal legislatures.

Pitchforks and Progress

But it can be done. The plutocrats are shamelessly autocratic and greed-obsessed, and believe themselves to be chosen by God to rule our lives. But they are partially blind to the consequences of their power-hungry policies. History tells us that when the tipping point has been reached in an organized social movement, revolutionary fervor and solutions can work their political magic with surprising quickness.

So, to the wealthy, this message: Do you want your cake and eat it too while you can still get it, and to hell with those below your feet, or do you want to take your chances with The Revolution? It could come to that, you know. (See Iceland. The Arab Spring. Central Europe.) You choose.

The bottom line: There are fewer than 1% of the plutocrats, and 99% of their victims. And those put-upon citizens are angry and know their pitchforks.